AN OVERVIEW OF RECENT CONSTITUTIONAL CHALLENGES TO WORKERS COMPENSATION LAWS. Larry Karns, Director of Workers Compensation Kansas Department of Labor

Transcription

1 AN OVERVIEW OF RECENT CONSTITUTIONAL CHALLENGES TO WORKERS COMPENSATION LAWS Larry Karns, Director of Workers Compensation Kansas Department of Labor

2 OKLAHOMA Torres v. Seaboard Foods, LLC 373 P.3d 1057 (2016)

3 Torres v. Seaboard Foods, LLC, 373 P.3d 1057 (2016), involved an employee who suffered cumulative injuries after working 120 days.

4 The ALJ denied the claim because the employee had not worked the 180-day period required by state law. The ALJ s decision was affirmed by the Workers Compensation Commission.

5 On appeal, the Oklahoma S. Ct. found that the 180-day provision which clearly imposes a duration-of-employment condition as a necessary predicate for filing a cumulative trauma workers compensation claim, violates the Due Process Section of the Oklahoma Constitution.

6 In a concurring opinion, Vice Chief Justice Douglas Combs explained that the law defines cumulative trauma in a particular manner: as an injury to an employee that is caused by the combined effect of repetitive physical activities extending over a period of time.... [The law] then, however, adds an arbitrary minimum employment period of 180 days.

7 Combs added, Two claimants may both have injuries caused by the combined effect of repetitive physical activities extending over a period of time in the course and scope of employment, but if one has 179 days of continuous active employment with the employer and the other has 180 days, the former does not have cumulative trauma.

8 The 180-day cutoff creates a classification that completely bars Petitioner and others in Petitioner s position from recovering for their injuries. In this regard, the 180 day line separating who may recover for potentially identical injuries on cumulative trauma grounds is not only arbitrary, but fundamentally unjust. (Emphasis in original.)

9 Justice Tom Colbert, also in a concurring opinion, stated that with the enactment of the Administrative Workers Compensation Act (AWCA), the balance is now off kilter and has become onesided to the benefit of the employer.

10 However, the Court s majority opinion did not adjudicate claimants assertion that the workers compensation grand bargain has been violated.

11 OKLAHOMA Vasquez v. Dillard s, Inc. 381 P.3d 768 (2016)

12 Jonnie Yvonne Vasquez, a Dillard s employee, injured her neck and shoulder lifting shoe boxes on September 11, 2014.

13 After filing for benefits under Dillard s Opt- Out plan, Dillard s denied the claim and employee appealed to the Workers Compensation Commission on December 5, 2014.

14 The Commission issued its decision on September 26, 2015, finding that the Opt-Out Act was unconstitutional because it denied injured workers the constitutionally protected right of access to courts and it denied equal protection to injured workers.

15 On appeal to the Supreme Court of Oklahoma, the Court found that the Workers Compensation Commission was without authority to rule on the constitutionality of the Opt Out Act, but also found that the opt-out provision of the Employee Injury Benefit Act was an unconstitutional special law under the Oklahoma constitution.

16 To determine if a special law is permissible under the state constitution s special law prohibition, it was the duty of the Court to determine whether the special law is so substantially related to a valid legislative objective that it will survive the constitutional challenge.

17 The Court rejected the employer s contention that the Opt Out Act is a constitutionally permissive special law because it is substantially and reasonably related to legitimate government objectives.

18 The Court had previously made it clear it would not accept an employer s invitation to find a discriminatory state law constitutional by relying on the interests of employers in reducing compensation costs.

19 The core provision of the Opt Out Act... creates impermissible, unequal, and disparate treatment of a select group of injured workers.... Vasquez v. Dillard s, Inc., 381 P.3d 768 (2016).

20 The Court found that the Employee Injury Benefit Act gives injured employees of employers that opted out of the Workers Compensation Act no protection to the coverage, process or procedure afforded their fellow employees falling under the Workers Compensation Act, and that it thus constituted a special law prohibited by the state constitution.

21 Because the Court considered the issue whether the Opt Out Act is an unconstitutional special law to be dispositive, it did not reach other constitutional challenges to the law based on denials of equal protection, due process and access to courts.

22 FLORIDA Castellanos v. Next Door Company 192 So.3d 431 (2016)

23 Petitioner Castellanos was injured while employed by Next Door Company and prevailed in his workers compensation claim with assistance of an attorney. Because Florida law limits a claimant s ability to recover attorney fees to a sliding scale based on benefits obtained, the fee to claimant s attorney came to only $1.53 an hour for hours deter-mined by the JCC to be reasonable and necessary in litigating the complex case.

24 On April 28, 2016, the Florida Supreme Court ruled that the state s mandatory attorneys fee schedule for workers compensation cases is unconstitutional under both Florida s and the U.S. Constitution as a violation of due process.

25 The Castellanos ruling said that the schedule, passed in 2009, is invalid because it eliminates the right of a claimant to get a reasonable attorney s fee, a right it says is a critical feature of the workers compensation law.

26 Reversing a lower court ruling and a finding by a Judge of Compensation Claims that both upheld the schedule and the fee in the case, the Florida Supreme Court concluded that the statute violates due process by creating an irrebuttable presumption that whatever fee the schedule comes up with is reasonable and by not providing any way for a claimant to refute the fee.

27 The Court said that while the Legislature has said it intends the workers compensation system to deliver benefits to injured workers efficiently and quickly, in reality the system has become increasingly complex to the detriment of the claimant, who depends on the assistance of a competent attorney to navigate the thicket.

28 The Court said that it is undeniable that without the right to an attorney with a reasonable fee, the workers compensation law can no longer assure the quick and efficient delivery of disability and medical benefits to an injured worker. The Court said it found the irrebuttable presumption, or inability of any claimant to challenge the fee, and not the particular fee, to be unconstitutional.

29 FLORIDA Bradley Westphal v. City of St. Petersburg 194 So.3d 311 (2016)

30 In December, 2009, Bradley Westphal, a fiftythree-year-old St. Petersburg, Florida firefighter suffered a severe lower back injury lifting heavy furniture in the course of fighting a fire.

31 Westphal experienced extreme pain and loss of feeling below his left knee and had multiple surgical procedures, including an eventual spinal fusion.

32 Soon after the injury, Westphal began receiving medical and temporary total disability benefits under Florida law. Under section (2)(a), entitlement to temporary total disability benefits ends when an injured worker reaches the date of maximum medical improvement or after 104 weeks, whichever occurs first.

33 Westphal did not reach maximum medical improvement prior to expiration of the 104-week limitation. At the expiration of that period, Westphal was still incapable of working and he filed a petition for benefits seeking either further temporary disability or permanent total disability under the law.

34 The JCC who heard Westphal s claim denied it, holding that in order to receive permanent total disability benefits, a claimant must show not only total disability upon cessation of temporary benefits, but also that total disability will be existing after the date of maximum medical improvement.

35 The line of cases that controlled the Judge s decision had observed that the statutory scheme could create a statutory gap a period of time when totally disabled individuals would no longer be eligible for temporary total disability benefits and could not receive any disability benefits until, possibly, finally being declared eligible for permanent total disability benefits.

36 The Judge nonetheless denied Westphal s claim, ruling that he had not yet reached maximum medical improvement and that it was too speculative to determine whether he will remain totally disabled after reached MMI. Thus, Westphal fell into the statutory gap and was essentially cut off from disability benefits indefinitely.

37 After appeal to the First District, the Florida Supreme Court on June 9, 2016 ruled 5-2 for plaintiff, holding that cutting off disability benefits after 104 weeks to a worker who is totally disabled and incapable of working but who has not yet reached maximum medical improvement is unconstitutional.

38 This provision of the statute, the Court held, is unconstitutional under article 1, section 21 of the Florida Constitution, as a denial of the right of access to courts, because it deprives an injured worker of disability benefits under these circumstances for an indefinite period of time thereby creating a system of redress that no longer functions as a reasonable alternative to tort litigation.

39 Concluding that the unconstitutionality of the temporary total disability benefits provision did not render the entire workers compensation system invalid, the Court employed the remedy of statutory revival directing that the 260 week limitation of temporary total disability benefits that preceded the 104 week limitation was revived in its place.

40 NEW MEXICO Rodriguez v. Brand West Dairy 378 P.3d 13 (2016)

41 Maria Angelica Aguirre and Noe Rodriguez worked for M.A. and Sons, Inc., as a chili picker and for Brand West Dairy, as a dairy herdsman, respectively. Each were injured in accidents while performing their respective job duties and each filed for compensation benefits which were denied under the farm and ranch labor exclusion of the New Mexico Workers Compensation Act, NMSA 1978, to -70. See (A)( The provisions of the Workers Compensation Act shall not apply to employers of... farm and ranch laborers. )

42 Each appealed to the Court of Appeals which found, applying rational basis review, that the farm and ranch labor exclusion of the state s workers compensation act was unconstitutional, in violation of Workers equal protection rights under Article II, Section 18 of the New Mexico Constitution.

43 Exclusion of farm and ranch laborers from workers compensation coverage, pursuant to provision of [Act], was not rationally related to legitimate state interest and, thus, provision was unconstitutional as violative of equal protection; under exclusion, workers whose primary duties were... cultivation of crops were considered farm laborers,...

44 ... while workers involved in processing... crops were not, such that exclusion was arbitrary on its face and as applied, given that distinction did not serve objectives of Act of maximizing limited recovery available to injured workers, minimizing costs to employers, and ensuring a quick and efficient system. Rodriguez v. Brand West Dairy, 356 P.3d 546, HN. 15 (N.M.Ct.App.)(2015).

45 On appeal to New Mexico Supreme Court, issue presented was whether the farm and ranch laborers exclusion from coverage under the N. M. Workers Compensation Act violated workers rights under Equal Protection Clause of Article II, Section 18 of New Mexico Constitution in light of the fact that other agricultural workers are not singled out for exclusion.

46 In a June 30, 2016 decision, the N. M. Supreme Court concurred with the lower court s rational basis review, concluding that there was nothing to distinguish farm and ranch laborers from other agricultural employees and that purported government interests such as cost savings, administrative convenience, and other justifications related to unique features of agribusiness bore no rational relationship to the Act s distinction between the groups.

47 This is nothing more than arbitrary discrimination and, as such, it is forbidden by our Constitution. Rodriguez v. Brand West Dairy, 378 P.3d 13 (2016). Accordingly, the Court held that the farm and ranch laborer exclusion contained in Section (A) of the Act was unconstitutional, and these cases were remanded for further proceedings.

48 In her dissent, Justice Judith K. Nakamura asserted that the majority erred, noting that the workers have a right against the disparate treatment allowed by this statute only if the statute does not rationally further a legitimate legislative purpose. Her dissent methodically refuted the majority s conclusions, arguing that the Legislature designed a statutory scheme that rationally controls costs for New Mexico farms and ranches, a legitimate state interest. Rodriguez v. Brand West Dairy, 378 P.3d 13, 54 (2016) (Nakamura, J., dissenting).

49 PENNSYLVANIA Protz v. Workers Compensation Appeals Board 124 A.3d 406 (2015)

50 In a September 18, 2015 decision now on appeal to the Pennsylvania Supreme Court, an en banc panel of the Pennsylvania Commonwealth Court, in a 4-3 decision, held that the use of the Fifth and Sixth Editions of the AMA Guides to the Evaluation of Permanent Impairment (Guides) in the performance of Impairment Rating Evaluations (IREs) is unconstitutional.

51 In the majority Opinion, the Court held that Section 306(a.2) was an unconstitutional delegation of authority by the legislature in violation of Article II, Section I of the Pennsylvania Constitution. Specifically, the Court held that Section 306(a.2) is unconstitutional as it proactively approved versions of the Guides beyond the Fourth Edition without review by the General Assembly.

52 In reaching its decision, the Court found that Section 306(a.2) fails to provide any standards to guide the AMA s determination regarding the methods to be used in grading impairments, by which physicians and Workers Compensation Judges are bound. In addition, the Court noted that Section 306(a.2) does not contain a mechanism requiring government review of any subsequent versions of the Guides beyond the Fourth, which was in effect at the time the General Assembly enacted Section 306(a.2).

53 It did not review or re-adopt the methodology contained in the Fifth or Sixth Edition of the Guides. Instead, the Court found that the legislature has simply provided a private party the AMA with carte blanche authority to implement its own policies and standards, proactively adopting those standards, sight unseen.

54 As a result, the Court held that Section 306(a.2) of the Act is unconstitutional to the extent it proactively approved versions of the Guides beyond the Fourth Edition without review. The Court vacated the Appeal Board s decision with respect to the Modification Petition and ordered that the matter be remanded to the Workers Compensation Judge to apply the Fourth Edition of the AMA Guides in adjudicating the same.

55 UTAH Injured Workers Ass n of Utah v. State of Utah 374 P.3d 14 (2016)

56 Member Attorneys of the Injured Workers Association of Utah brought a declaratory judgment action in district court, challenging the constitutionality of the Utah Labor Commission s fee schedule and the statute authorizing the Labor Commission to regulate claimant attorney fees in workers compensation cases.

57 In a 4-0 opinion issued May 18, 2016, the Utah Supreme Court ruled that the legislative enactment granting authority to determine legal fees in workers compensation cases to the Utah Labor Commission is unconstitutional because it violates the separation-of-powers doctrine.

58 The Court also ruled the fee schedule set up by the Utah Labor Commission is unconstitutional. That schedule includes a cap of $18,590 on overall fees and applies only to the workers attorneys the fees for lawyers representing employers and insurance companies have never been regulated by the commission, according to court documents.

59 Writing for the Court, Justice Christine Durham said that under the Utah Constitution, the state Supreme Court has the exclusive authority to govern the practice of law, which undoubtedly includes the regulation of attorney fees.

60 The Court, she said, could delegate that authority to the state Bar and maintain oversight, but cannot delegate the power to govern the practice of law to the Legislature or the Labor Commission.

61 This would violate the separation-of-powers clause because the ability to delegate this authority to another branch of our state government is not expressly directed or permitted in the text of the Utah Constitution, Durham wrote.

62 ALABAMA Clower v. CVS Caremark Corp. 01-CV (Cir.Ct.Jeff.Co.Ala., Birmingham Div.)(May 8, 2017)

63 Plaintiff Nora Clower filed a workers compensation claim in November, 2013, alleging she had injured her back on the job.

64 The Worker's Compensation Act classified injured workers into two groups based on entitlement to disability benefits: (a) those who are entitled to indexed benefits - Temporary Total Disability Benefits (TTD) and permanent total disability benefits versus (b) those who are not entitled to indexed benefits- those entitled to Permanent Partial Disability (PPD).

65 Indexed benefits change with Alabama's average weekly wage. The $220 per week that Clower received in PPD was a figure that had not been adjusted in three decades. $220 per week is below the minimum wage and poverty line.

66 Under the current law, workers hurt while on the job are eligible for $220 a week in compensation for a disability once their condition has stabilized. The law dated to 1987 and its $220 per week compensation cap was above minimum wage level and the poverty level at that time, but it has not been updated since.

67 Attorneys argued that a similar cap would total just under $500 today. The Court concluded that [b]ecause the constitutionality of a statute tested against [the Alabama Constitution], depends on the existence of a sufficient and meaningful quid pro quo for the rights replaced by the statute, the ever less valuable $220 cap of fails to meet that standard necessary to sustain its constitutionality, as well.

68 The court also found that the $220 cap on permanent partial disability benefits was in violation of the constitutional guarantee of equal protection of the law because it bore no rational relation to any identifiable legislative goals by baselessly classifying workers into two groups giving those disabled only temporarily the benefit of an indexed system of benefits and denying it to those permanently disabled.

69 Regarding the law s fifteen percent cap on attorney s fees, the Judge held that it was unconstitutional citing Florida s Castellanos v. Next Door Co., in support. The fee cap establishing that no more than 15% is enough, regardless of a myriad of potential attendant circumstances, fails to afford due process of the law.

70 Judge Ballard also ruled that a cap on attorney s fees is a function of the judiciary branch and not the legislative branch, citing to Utah s Injured Workers Ass n of Utah v. Utah, concluding that this legislative trespass into a function reserved to the judicial branch of government.... is unconstitutional under Alabama s constitutional guaranty of separation of powers as well.

71 Because of a non-severability provision in Alabama s workers compensation law, the finding of unconstitutionality of these two provisions invalidated the entire Alabama workers compensation system. A 120-day stay of the ruling issued on May 8 to allow the Alabama legislature sufficient time to amend the statute was on May 18, 2017 converted by Judge Ballard to an indefinite stay.

72 KANSAS Pardo v. United Parcel Service, Inc. Workers Compensation Appeals Board Docket No. 1,073,268

73 In this Kansas Workers Compensation Appeals Board decision, the issue for review was whether literal application of the American Medical Association, Guides to the Evaluation of Permanent Impairment (6th ed.) is unconstitutional as applied to claimant, Francisco Pardo.

74 After having had a prior rotator cuff tear injury to his left shoulder in 2013, Claimant reinjured his left shoulder on March 28, While climbing onto a spotter, used to move UPS trailers at his employer s trailer yard, claimant slipped on grease and fell, causing his full body weight to jerk his left arm.

75 During a subsequent arthroscopic procedure, it was determined that claimant had a new partial thickness rotator cuff tear in a different location and not in direct connection with the previous tear.

76 Upon releasing claimant at maximum medical improvement, claimant still had significant ongoing symptoms with his left shoulder, including continuing left shoulder pain, hand pain, some headaches, loss of strength, cramping, straining, significant ongoing limited range of motion and impairment to activities of daily living.

77 Both claimant s treating physician, Dr. Rasmussen, and a second physician who examined claimant at his counsel s request, Dr. Koprivica, determined that claimant s 2015 injury was the prevailing factor in the new left shoulder structural injury.

78 Dr. Koprivica noted that the AMA Guides, 6th Edition provides that the impairment rating could only be given once in an individual s lifetime and thus a literal application of the 6th Edition to this new injury would result in a zero percent permanent partial impairment rating.

79 Dr. Rasmussen provided an impairment rating of 5% over and above the 10% he assessed for the previous injury, but admitted that a strict interpretation of the AMA Guides would result in a zero percent impairment rating due to the previous impairment rating. The ALJ found that claimant was not entitled to any permanent partial disability compensation for his 2015 injury.

80 On appeal to the Workers Compensation Appeals Board, Claimant argued that the application of the AMA Guides, 6th Edition violates Section 18 of the Kansas Constitution Bill of Rights and raised issues related to due process, disparate treatment, lack of a remedy, evidentiary flaws related to mandating use of the AMA Guides, 6th Edition, unlawful delegation of legislative powers and impermissible legislative predetermination of an adjudicatory fact.

81 In its October 26, 2016 decision, the Board noted that Section 18 constitutional guarantees are implicated when the legislature imposes statutory caps on noneconomic damages for injured workers and opined that Claimant was afforded no economic recovery for permanent impairment stemming from his compensable workers compensation injury, other than payment of medical and temporary total disability benefits.

82 However, acknowledging that the statute is presumed to be constitutional and that it lacked authority to hold a legislative enactment unconstitutional, the Board ruled that it lacked jurisdiction to rule on claimant s issues and affirmed the ALJ s decision.

83 Board Member Tom Arnhold issued a five-page concurring opinion concluding that although the Board does not have the authority to find the statute unconstitutional, he would so conclude if he had the authority to do so.

84 In Arnhold s two-step constitutionality analysis, conducted in accordance with the framework set forth by the Kansas Supreme Court in Injured Workers of Kansas v. Franklin, 262 Kan. 840, 942 P.2d 591 (1997), the legislative requirement to calculate an award of workers compensation in accordance with the AMA Guides, 6th Edition fails both tests: first, its use is not reasonably necessary to promote the general welfare of the state...

85 ... and second, the mandate to calculate claimant s permanent partial disability award using the 6th Edition of the AMA Guides makes the quid pro quo inadequate, that is, the Act no longer constitutes an adequate substitute remedy for abrogation of an employee s right to sue employers for negligence, violating due process.

86 The case is currently on appeal in the Kansas Court of Appeals. Appellant Pardo has submitted his brief and Appellee United Parcel Service filed a motion for extension of time to submit its brief, which had been due on May 8, to June 7. On June 5, Appellee filed a second motion for extension of time to file its brief.

87 KANSAS Injured Workers of Kansas v. Franklin 942 P. 2d 591 (1997)

88 In Injured Workers of Kansas v. Franklin, individuals, groups and labor organizations filed a petition for declaratory judgment seeking declaration that sweeping 1993 amendments to Kansas Workers Compensation Act were unconstitutional and void.

89 Plaintiffs contended that amendments to the Act violated due process, equal protection and the separation of powers doctrine and the amended Act as a whole violated due process in that it no longer provided an adequate quid pro quo for the legislature's 1911 abrogation of an injured worker's right to sue his employer for negligence.

90 Utilizing rational basis review, the Court found that none of the amendments violate either equal protection or due process because the amendments were rationally related to valid state objectives.

91 The Court also held that amendment setting graduated contingency attorney fee rates did not interfere with Kansas Supreme Court s inherent power to regulate the practice of law or violate the separation of powers doctrine.

92 The Court acknowledged that an originally adequate quid pro quo for the abrogation of a common-law right might become so diluted that it would no longer be adequate to support the abrogation of the common-law right and would thus violate due process.

93 The test used by the Court to determine whether the legislature had so altered the original statutory replacement to an extent to make it unconstitutional is whether the substitute remedy would have been sufficient if the modification had been a part of the original Act.

94 The court concluded the 1993 Act remained an adequate quid pro quo despite the fact that the legislative changes made it more difficult than it was prior to the changes for injured workers to timely notify an employer of an injury so as to recover compensation, despite the fact that some injuries were reclassified as scheduled injuries reducing...

95 ... the compensation applicable to those injuries, despite the fact that workers compensation benefits could be offset by some forms of retirement benefits and despite other amendments that made it more difficult than it was prior to 1993 for an injured worker to receive workers compensation benefits.